en

IEB

Universitat de Barcelona logotipo
Working Paper
Fiscal Federalism
Alejandro Esteller, Albert Solé

2000/01: Vertical income tax externalities and fiscal interdependence: Evidence from the US

Concurrent taxation is a feature of many federal systems. As a result, the tax policy of one level of government affects the tax base of the other. A way to check the empirical relevance of this hypothesis is to test for the existence of interdependencies in the tax setting behaviour of various layers of government. Following this approach, this paper estimates the reaction of U.S. state personal income and general sales taxes to federal tax rates, taking into account the special features of the U.S. tax system. We find that when the federal government increases taxes, there is a significant positive response of state taxes.



Download PDF

This website uses cookies to ensure that you receive the best experience when navigating. If you continue without changing the settings, you accept its use in conformity with our cookies policy. More information